The Power of Integrality: Linkages between Product Architecture, Innovation, and Industry Structure
A substantial literature stream suggests that many products are becoming more modular over time, and that this development is often associated with a change in industry structure towards higher degrees of specialization. These developments can have strong implications for an industryÂ€Ù³ competition as the history of the PC industry illustrates. To add to our understanding of the linkages between product architecture, innovation, and industry structure we study an unusual case in which a firm Â€Ó through decreasing its product modularity Â€Ó turned its formerly competitive industry into a near-monopoly. Using this case study we explore how existing theories on modularity explain the observed phenomenon, and show that most consider in their analysis technological change in rather long-term dimensions, and tend to focus on efficiencyrelated arguments to explain the resulting forces on competition. Expanding on these theories we add three critical aspects to the theory construct that connects technological change and industry dynamics. First, we suggest re-integating as a new design operator to explain product architecture genesis. Second, we argue that a finer-grained analysis of the product architecture shows the existence of multiple linkages between product architecture and industry structure, and that these different linkages help explain the observed intra-industry heterogeneity across firms. Third, we propose that the firm boundary choice can also be a pre-condition of the origin of architectural innovation, not only an outcome of efficiency considerations.
|Date of creation:||13 Apr 2007|
|Date of revision:|
|Contact details of provider:|| Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA|
Web page: http://mitsloan.mit.edu/
More information through EDIRC
|Order Information:|| Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cooper, Robin & Slagmulder, Regine, 2004. "Interorganizational cost management and relational context," Accounting, Organizations and Society, Elsevier, vol. 29(1), pages 1-26, January.
- Richard N. Langlois, 2003.
"The vanishing hand: the changing dynamics of industrial capitalism,"
Industrial and Corporate Change,
Oxford University Press, vol. 12(2), pages 351-385, April.
- Richard N. Langlois, 2002. "The Vanishing Hand: the Changing Dynamics of Industrial Capitalism," Working papers 2002-21, University of Connecticut, Department of Economics.
- Richard N. Langlois, 2001. "The Vanishing Hand: the Changing Dynamics of Industrial Capitalism," Economic History 0110001, EconWPA.
- Fixson, Sebastian K., 2007. "Modularity and Commonality Research: Past Developments and Future Opportunities," Working papers 37286, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Langlois, Richard N., 2002.
"Modularity in technology and organization,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 49(1), pages 19-37, September.
- Langlois, Richard N., 2004.
"Chandler in a Larger Frame: Markets, Transaction Costs, and Organizational Form in History,"
Enterprise & Society,
Cambridge University Press, vol. 5(03), pages 355-375, September.
- Richard N. Langlois, 2003. "Chandler in a Larger Frame: Markets, Transaction Costs, and Organizational Form in History," Working papers 2003-16R, University of Connecticut, Department of Economics, revised Jan 2004.
- Fixson, Sebastian K., 2007. "Modularity and Commonality Research: Past Developments and Future Opportunities," Working papers 37145, Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Nicholas Economides, 1995.
"The Economics of Networks,"
94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
- Economides, Nicholas, 1996. "The economics of networks," International Journal of Industrial Organization, Elsevier, vol. 14(6), pages 673-699, October.
- Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
- Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
- Richard N. Langlois, 2005. "The Secret Life of Mundane Transaction Costs," Working papers 2005-49, University of Connecticut, Department of Economics.
- Alan MacCormack & John Rusnak & Carliss Y. Baldwin, 2006. "Exploring the Structure of Complex Software Designs: An Empirical Study of Open Source and Proprietary Code," Management Science, INFORMS, vol. 52(7), pages 1015-1030, July.
When requesting a correction, please mention this item's handle: RePEc:mit:sloanp:37154. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.